2Q8 Financial Results July 3, 208
2Q8 Financial highlights ROTCE 7% Common equity Tier 2.9% Net payout LTM 3 00% 2Q8 net income of $8.3B and EPS of $2.29 Managed revenue of $28.4B 4 Expense of $6.0B and managed overhead ratio of 56% 4 Fortress balance sheet Average core loans 5 ex-cib up 7% YoY and 2% QoQ Basel III Fully Phased-In CET capital of $85B 2 and Standardized CET ratio of.9% 2 Delivered strong capital return $6.6B 6 distributed to shareholders in 2Q8, including $4.7B of net repurchases Common dividend of $0.56 per share See note 2 on slide 9 2 Represents estimated common equity Tier ( CET ) capital and ratio under the Basel III Fully Phased-In capital rules to which the Firm will be subject as of January, 209. See note 7 on slide 9 3 Last twelve months ( LTM ). Net of stock issued to employees 4 See note on slide 9 5 See note 8 on slide 9 6 Net of stock issued to employees
2Q8 Financial results $B, excluding EPS Firmwide total credit reserves of $4.4B Consumer reserves of $9.4B Wholesale reserves of $5.0B net release of $44mm in 2Q8 $ O/(U) 2Q8 Q8 2Q7 Net interest income $3.6 $0.2 $. Noninterest revenue 4.7 (0.3) 0.6 Managed revenue $B 2Q8 Q8 2Q7 28.4 (0.).7 Net charge-offs $.3 $.3 $.2 Expense 6.0 (0.).2 Reserve build/(release) (0.0) (0.2) Credit costs Credit costs $.2 $.2 $.2.2 Reported net income 2Q8 Tax rate $8.3 ($0.4) $.3 Effective rate: 2.3% Net income applicable to common stockholders Managed rate: 25.8%,5 $7.9 ($0.4) $.3 Reported EPS $2.29 ($0.08) $0.47 ROE 2 2Q8 ROE O/H ratio 4% 5% 2% CCB 26% 55% ROTCE 2,3 CIB 7% 54% 7 9 4 CB 2% 36% Overhead ratio managed,2 AWM 33% 72% 56 56 55 Memo: Adjusted expense 4 $6.0 $.3 Memo: Adjusted overhead ratio,2,4 56% 56% 57% Note: Totals may not sum due to rounding See note on slide 9 2 Actual numbers for all periods, not over/(under) 3 See note 2 on slide 9 4 See note 3 on slide 9 5 Fully taxable-equivalent adjustments ( TEA ) of $635mm in 2Q8, compared to $935mm in 2Q7 2
Fortress balance sheet and capital $B, except per share data Basel III Standardized Fully Phased-In 2Q8 Q8 2Q7 CET capital $85 $84 $87 2Q8 Basel III CET capital ratio Advanced Fully.9%.8% 2.4% Tier capital Phased-In of 2.8% $20 $209 $22 Tier capital ratio 3.6% 3.5% 4.% Total capital $238 $238 $242 Total capital ratio 5.4% 5.3% 6.0% Risk-weighted assets $,549 $,553 $,507 Firm SLR 2 6.5% 6.5% 6.6% Total assets (EOP) $2,590 $2,60 $2,563 Tangible common equity (EOP) 3 $85 $84 $88 Tangible book value per share 3 $55.4 $54.05 $53.29 Estimated for the current period. The prior year risk-weighted assets, as well as the ratios, have been revised to conform with the current period presentation. Reflects the capital rules to which the Firm will be subject as of January, 209. See note 7 on slide 9 2 Estimated for the current period. Reflects the supplementary leverage ratio ( SLR ) which is effective as of January, 208. See note 7 on slide 9 3 See note 2 on slide 9 3
Consumer & Community Banking $mm Average loans up 2% and core loans up 7% YoY Average deposits up 5% YoY Active mobile customers up 2% YoY Client investment assets up 2% YoY Credit card sales up % YoY; merchant processing volume up 2% YoY See note on slide 9 For additional footnotes see slide 0 $ O/(U) 2Q8 Q8 2Q7 Revenue $2,497 ($00) $,085 Consumer & Business Banking 6,3 409 898 Home Lending,347 (62) (79) Card, Merchant Services & Auto 5,09 (347) 266 Expense 6,879 (30) 379 Credit costs,08 (209) (286) Net charge-offs,08 (209) (36) Change in allowance (250) Net income $3,42 $86 $,89 Key drivers/statistics ($B) 2 Equity $5.0 $5.0 $5.0 ROE 26% 25% 7% Overhead ratio 55 55 57 Average loans $475.7 $475. $467.5 Average deposits 673.8 659.6 639.9 Active mobile customers (mm) 3.7 30.9 28.4 Debit & credit card sales volume 3 $255.0 $232.4 $23.3 2Q8 net revenue rate ex-rewards liability adjustment 7 :.32% 4 Financial performance Net income of $3.4B Revenue of $2.5B, up 0% YoY, driven by higher NII on deposit and card margin expansion and balance growth 2Q8 includes a card rewards liability adjustment of ~$330mm Expense of $6.9B, up 6% YoY, driven by higher auto lease depreciation and investments in technology Credit costs of $.B, down $286mm YoY Net recovery in Home Lending from a loan sale predominantly offset by higher net charge-offs in Card No reserve actions this quarter vs. net build in 2Q7 Key drivers/statistics ($B) detail by business 2Q8 Q8 2Q7 Consumer & Business Banking Average Business Banking loans $23.9 $23.7 $22.8 Business Banking loan originations.9.7 2.2 Client investment assets (EOP) 283.7 276.2 253.0 Deposit margin 2.36% 2.20%.96% Home Lending Average loans $24.5 $240.4 $234.5 Loan originations 4 2.5 8.2 23.9 EOP total loans serviced 802.6 804.9 827.8 Net charge-off/(recovery) rate 5 (0.29)% 0.03% 0.0% Card, Merchant Services & Auto Card average loans $42.7 $42.9 $38. Auto average loans and leased assets 83.8 83.4 80.2 Auto loan and lease originations 8.3 8.4 8.3 Card net charge-off rate 3.27% 3.32% 3.0% Card Services net revenue rate 0.38.6 0.53 Credit Card sales volume 6 $74.0 $57. $56.8 Merchant processing volume 330.8 36.3 294.4
Corporate & Investment Bank $mm $ O/(U) 2Q8 Q8 2Q7 Revenue $9,923 ($560) $998 Investment banking revenue,949 362 28 Treasury Services,8 65 26 Lending 32 9 (52) Total Banking 3,45 446 292 Fixed Income Markets 3,453 (,00) 237 Equity Markets,959 (58) 373 Securities Services,03 44 2 Credit Adjustments & Other (43) 08 (25) Total Markets & Investor Services 6,472 (,006) 706 Expense 5,403 (256) 526 Credit costs 58 26 Net income $3,98 ($776) $488 Key drivers/statistics ($B) 2 Equity $70.0 $70.0 $70.0 ROE 7% 22% 5% Overhead ratio 54 54 55 Comp/revenue 27 29 27 IB fees ($mm) $2,39 $,696 $,839 Average loans 9.9 4.8 5.8 Average client deposits 3 433.6 423.3 404.9 Assets under custody ($T) 24.2 24.0 22. ALL/EOP loans ex-conduits and trade 4.27%.46%.83% Net charge-off/(recovery) rate 4 0.40 0.07 0.7 Average VaR ($mm) $33 $40 $27 Financial performance Net income of $3.2B on revenue of $9.9B Banking revenue IB revenue of $.9B, up 3% YoY, driven by higher advisory and equity underwriting fees Ranked # in Global IB fees for 2Q8 Treasury Services revenue of $.2B, up 2% YoY, driven by higher interest rates and growth in operating deposits Markets & Investor Services revenue Markets revenue of $5.4B, up 3% YoY, or up 6% YoY excluding the impact of tax reform 5, with good client flows and strength across products Fixed Income Markets revenue of $3.5B, up 7% YoY, or up 2% YoY excluding the impact of tax reform 5 Equity Markets revenue of $2.0B, up 24% YoY Securities Services revenue of $.B, up 2% YoY, driven by higher interest rates and deposit growth as well as higher asset-based fees from new client activity and higher market levels Expense of $5.4B, up % YoY, driven by higher performancerelated compensation, volume-related transaction costs and investments in technology Credit costs of $58mm Q8 and 2Q7 credit costs included net reserve releases in Energy 6 See note on slide 9 For additional footnotes see slide 0 5
Commercial Banking $mm 2Q8 Q8 2Q7 Revenue $2,36 $50 $228 Middle Market Banking 99 24 80 Corporate Client Banking 807 20 45 Commercial Term Lending 344 (8) (20) Real Estate Banking 70 6 23 Other 76 8 Expense 844 54 Credit costs 43 48 73 Net income $,087 $62 $85 Key drivers/statistics ($B) 2 $ O/(U) Equity $20.0 $20.0 $20.0 ROE 2% 20% 7% Overhead ratio 36 39 38 Gross IB Revenue ($mm) $739 $569 $533 Average loans 205.6 202.4 97.9 Average client deposits 70.7 75.6 73.2 Allowance for loan losses 2.6 2.6 2.7 Nonaccrual loans 0.5 0.7 0.8 Net charge-off/(recovery) rate 3 0.07% 0.02% ALL/loans 3.27.28.35 Financial performance Net income of $.B Revenue of $2.3B, up % YoY Net interest income of $.7B, up 2% YoY, driven by higher deposit margins Gross IB revenue of $739mm, up 39% YoY, driven by an increased number of large transactions Expense of $844mm, up 7% YoY on continued investments in banker coverage and technology Credit costs of $43mm Net charge-off rate of 7 bps Average loan balances of $206B, up 4% YoY and 2% QoQ C&I 4 up 3% YoY and up 3% QoQ CRE 4 up 4% YoY and flat QoQ Average client deposits of $7B, down % YoY See note on slide 9 For additional footnotes see slide 0 6
Asset & Wealth Management $mm 2Q8 Q8 2Q7 Revenue $3,572 $66 $35 Asset Management,826 39 40 Wealth Management,746 27 95 Expense 2,566 (5) 49 Credit costs 2 (3) (2) Net income $755 ($5) $3 Key drivers/statistics ($B) 2 $ O/(U) Equity $9.0 $9.0 $9.0 ROE 33% 34% 27% Pretax margin 28 26 30 Assets under management (AUM) $2,028 $2,06 $,876 Client assets 2,799 2,788 2,598 Average loans 36.7 32.6 22.2 Average deposits 39.6 44.2 50.8 Financial performance Net income of $755mm Revenue of $3.6B, up 4% YoY, driven by higher management fees on growth in long-term products as well as strong banking results Expense of $2.6B, up 6% YoY, driven by investments in advisors and technology as well as higher external fees on revenue growth AUM of $2.0T, up 8% YoY Client assets of $2.8T, up 8% YoY Net inflows of $4B into long-term products and $7B into liquidity products Average loan balances of $37B, up 2% YoY Average deposit balances of $40B, down 7% YoY See note on slide 9 2 Actual numbers for all periods, not over/(under) 7
Corporate $mm $ O/(U) 2Q8 Q8 2Q7 Treasury and CIO ($53) $34 ($39) Other Corporate 7 23 (567) Net income ($36) $247 ($706) Financial performance Treasury and CIO 2Q8 results included a $74mm pretax loss on the liquidation of a legal entity Other Corporate 2Q7 results included a $645mm pretax legal benefit from a settlement 8
Notes Notes on non-gaap financial measures. In addition to analyzing the Firm s results on a reported basis, management reviews Firmwide results, including the overhead ratio, on a managed basis; these Firmwide managed basis results are non-gaap financial measures. The Firm also reviews the results of the lines of business on a managed basis. The Firm s definition of managed basis starts, in each case, with the reported U.S. GAAP results and includes certain reclassifications to present total net revenue for the Firm and each of the reportable business segments on a fully taxable-equivalent ( FTE ) basis. Accordingly, revenue from investments that receive tax credits and tax-exempt securities is presented in the managed results on a basis comparable to taxable investments and securities. These financial measures allow management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded within income tax expense. These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business. For a reconciliation of the Firm s results from a reported to managed basis, see page 7 of the Earnings Release Financial Supplement. 2. Tangible common equity ( TCE ), return on tangible common equity ( ROTCE ) and tangible book value per share ( TBVPS ), are each non-gaap financial measures. TCE represents the Firm s common stockholders equity (i.e., total stockholders equity less preferred stock) less goodwill and identifiable intangible assets (other than MSRs), net of related deferred tax liabilities. For a reconciliation from common stockholders equity to TCE, see page 9 of the Earnings Release Financial Supplement. ROTCE measures the Firm s net income applicable to common equity as a percentage of average TCE. TBVPS represents the Firm s TCE at period-end divided by common shares at period-end. Book value per share was $68.85, $67.59 and $66.05 at June 30, 208, March 3, 208 and June 30, 207, respectively. TCE, ROTCE and TBVPS are utilized by the Firm, as well as investors and analysts, in assessing the Firm s use of equity. 3. Adjusted expense and adjusted overhead ratio are each non-gaap financial measures. Adjusted expense excluded Firmwide legal expense/(benefit) of $0 million, $70 million and $6 million for the three months ended June 30, 208, March 3, 208 and June 30, 207, respectively. The adjusted overhead ratio measures the Firm s adjusted expense as a percentage of adjusted managed net revenue. Management believes this information helps investors understand the effect of these items on reported results and provides an alternate presentation of the Firm s performance. 4. Net charge-offs and net charge-off rates exclude the impact of purchased credit-impaired ( PCI ) loans. 5. The Card Services net revenue rate excluding rewards liability adjustment of approximately $330mm for the three months ended June 30, 208 is a non-gaap financial measure. This measure is useful in facilitating a more meaningful comparison with prior periods. 6. CIB calculates the ratio of the allowance for loan losses to end-of-period loans excluding the impact of consolidated Firm-administered multi-seller conduits and trade finance loans, to provide a more meaningful assessment of CIB s allowance coverage ratio. Notes on key performance measures 7. The Basel III regulatory capital, risk-weighted assets and capital ratios, (fully phased-in effective January, 209), and the Basel III supplementary leverage ratio ( SLR ), (fully-phased in effective January, 208), are all considered key regulatory capital measures. The capital adequacy of the Firm is evaluated against the Basel III approach (Standardized or Advanced) that results, for each quarter, in the lower ratio (the Collins Floor ). These measures are used by management, bank regulators, investors and analysts to assess and monitor the Firm s capital position. For additional information on these measures, including the Collins Floor, see Capital Risk Management on pages 82-9 of the Firm s Annual Report on Form 0-K for the year ended December 3, 207 and pages 32-37 of the Firm s Quarterly Report on Form 0-Q for the quarter ended March 3, 208. 8. Core loans represent loans considered central to the Firm s ongoing businesses; core loans exclude loans classified as trading assets, runoff portfolios, discontinued portfolios and portfolios the Firm has an intent to exit. 9
Notes Additional Notes on slide 4 Consumer & Community Banking 2. Actual numbers for all periods, not over/(under) 3. The prior year amount was revised to conform with the current period presentation 4. Firmwide mortgage origination volume was $23.7B, $20.0B and $26.2B for the three months ended June 30, 208, March 3, 208 and June 30, 207, respectively 5. Excludes the impact of PCI loans, including PCI write-offs of $73mm, $20mm and $22mm for the three months ended June 30, 208, March 3, 208 and June 30, 207, respectively. See note 4 on slide 9. The net charge-off/(recovery) rate for the three months ended June 30, 208 includes a recovery from a loan sale 6. Excludes Commercial Card 7. See note 5 on slide 9 Additional Notes on slide 5 Corporate & Investment Bank 2. Actual numbers for all periods, not over/(under) 3. Client deposits and other third-party liabilities pertain to the Treasury Services and Securities Services businesses 4. Loans held-for-sale and loans at fair value were excluded when calculating the loan loss coverage ratio and net charge-off/(recovery) rate. ALL/EOP loans as reported was 0.89%,.00%, and.9% for the three months ended June 30, 208, March 3, 208 and June 30, 207, respectively. See note 6 on slide 9 5. Reflects a reduction of approximately $60mm in FTE adjustments compared with the prior year quarter, resulting from the enactment of the Tax Cuts and Jobs Act 6. Energy includes Oil & Gas, Natural Gas Pipelines, and Metals & Mining Additional Notes on slide 6 Commercial Banking 2. Actual numbers for all periods, not over/(under) 3. Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate and loan loss coverage ratio 4. Commercial and Industrial ( C&I ) and Commercial Real Estate ( CRE ) groupings for CB are generally based on client segments and do not align with regulatory definitions 0
Forward-looking statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 995. These statements are based on the current beliefs and expectations of JPMorgan Chase & Co. s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause JPMorgan Chase & Co. s actual results to differ materially from those described in the forward-looking statements can be found in JPMorgan Chase & Co. s Annual Report on Form 0-K for the year ended December 3, 207 and Quarterly Report on Form 0-Q for the quarter ended March 3, 208, which have been filed with the Securities and Exchange Commission and are available on JPMorgan Chase & Co. s website (http://investor.shareholder.com/jpmorganchase/sec.cfm), and on the Securities and Exchange Commission s website (www.sec.gov). JPMorgan Chase & Co. does not undertake to update any forward-looking statements.